Underwater Atlanta: Why negative equity matters and where to turn for help
By George S. Burgan, Director of Communications & Technology, Atlanta Neighborhood Development Partnership
Has your home value increased significantly in the last few years? If so, you likely live in a metro Atlanta neighborhood recovering from the housing and economic crisis. But not all neighborhoods are experiencing the same rebound. Neighborhoods south of I-20 and along the I-85 corridor are struggling with high concentrations of negative equity. But there are steps concerned homeowners, neighborhood leaders, housing advocates and local jurisdictions can take action to address the problem.
WHY NEGATIVE EQUITY MATTERS
Negative equity damages the stability of our communities. Homeowners are stripped of wealth, they spend less on maintenance and the local economy, homes fall into decline, property taxes drop off or remain unpaid, and blight accelerates. Trapped by these circumstances, underwater borrowers can’t move to seek new or better job opportunities.
Metro Atlanta neighborhoods most impacted by negative equity have a significant proportion of minority families. This is especially troubling given that home equity accounts for 92% of personal net worth for the typical African-American household.
THE LATEST WORD
The Haas Institute’s 2013 “Underwater America” report states that our region has the highest rate of underwater homeowners in the country – 35 percent. But for Clayton County, the picture is far worse. In 2013, Clayton led the nation with 61 percent of all homes underwater – with some communities having as many as 75 percent.
One year after the Haas report, market conditions and efforts from federal programs and local practitioners appear to be yielding modest improvements. According to Zillow’s 2014 negative equity report, metro Atlanta moved from 35 to 26 percent of its homes underwater – compared to a national average of 16.9. Clayton still leads the nation, but improved from 61 to 58 percent. Troubled zip code 30296 in Clayton’s Riverdale decreased from 67 to 65 percent. The nine percent drop in the region’s average, compared to a two percent drop in troubled areas, underscores the uneven recovery. The number of metro communities far above the national average underscores the need for continued education and engagement.
ADDRESSING THE ISSUE
Troubled homeowners should first seek professional help by calling 1-888-995-HOPE or contacting a local HUD-approved housing counseling organization that offers loan modification support, foreclosure prevention and other financial counseling. To find such an organization, visit www.consumerfinance.gov/find-a-housing-counselor/.
Homeowners should seek a loan modification or refinance options with their lender or through one of many federal programs listed at www.MakingHomeAffordable.gov. Officials with one such program, the Home Affordable Refinance Program (HARP), have stated that as many as 29,000 metro Atlanta households are eligible for the federal refinance program, but have NOT applied. This underscores the need for much continued education about the opportunities available.
While there are a number of programs, they can be difficult to understand. And unfortunately, there are unscrupulous actors attempting to profit from unsuspecting homeowners. NeighborWorks America offers a web site to provide information about loan modification scans that concerned homeowners can use as a resource. For more details, visit www.loanscamalert.org.
While the problem of negative equity is considered to be a homeowner concern, the issue clearly impacts the neighborhood as well. Neighborhoods with high concentrations of negative equity can take action.
- Rally neighbors to focus cleanliness, lawn maintenance, and code enforcement;
- Understand your community’s “brand” and focus on selling the neighborhood;
- Conduct coordinated open house events to showcase neighborhood amenities; and
- Focus on attracting new buyers who create market comps that increase surrounding home values.
The Piece by Piece foreclosure response initiative has compiled a Negative Equity Resource and Information Guide which presents a comprehensive list of federal and state resources to help homeowners, neighborhoods, practitioners and local jurisdictions. Download the complete guide at www.piecebypieceatlanta.org/underwaterguide.pdf
ABOUT THE INITIATIVE: Piece by Piece – A Regional Foreclosure Initiative is a bold, coordinated effort designed to spur strategic action from the more than 150 regional stakeholders who care passionately about protecting the long-term future of our neighborhoods and communities. Visit us online at www.PiecebyPieceAtlanta.org. Follow us on Twitter @PiecebyPieceATL.